Extra demand, same supply nudges up hotel rates

JIM RYDBOM/jrydbom@greeleytribune.com
Johnny Deluna of Soto Drywall uses a pair of stilts to tape and texture sheetrock on one of the rooms on the third floor of the newly constructed Candlewood Suites, 3530 29th St. in west Greeley last week. Construction on the new 83-room hotel is expected to be completed in August.

JIM RYDBOM/jrydbom@greeleytribune.com
Shon Reyes of Alliance Electric works on wiring the new Candlewood Suites, 3530 29th St. in west Greeley, last week. Hotel prices in Greeley have seen a increase due to the demand of all the oil workers in the area.

JIM RYDBOM/jrydbom@greeleytribune.com
This is a photo of a unfinished room at the new Candlewood Suites in west Greeley. Due to the increase of rooms being rented by the oil and gas industry hotels have seen a boom in business.

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While demand for hotel rooms has skyrocketed in the last year in Greeley, so too have the daily rates.

Many Greeley area hotels are charging $100 and more for daily room rentals, while their counterparts in Loveland and Fort Collins are charging much less.

Why? Because they can. It’s ECON 101.

“We have Loveland and Fort Collins hotels visiting often asking us to send people their way,” said Brian Van Buskirk , general manager of the Fairfield Inn & Suites, 2401 29th St. in Greeley. “It’s amazing what 20 miles can do. Our market is so hot, and Loveland and Fort Collins are struggling. They draw people in with the lower rates. It’s basically supply and demand.”

Greeley hotel occupancy has remained the highest in the state for months, coming out of February at 82 percent . It’s chiefly a result of the oil and gas activity, as well as the construction workers building Leprino Foods, managers say.

It’s growing every year, which nudges up prices.

According to the Rocky Mountain Lodging Report, average daily rates in Greeley in February were $92.16, a couple of dollars above Fort Collins, but still well below Loveland’s rate of $103.57.

But that picture is slowly changing.

At the Hampton Inn properties in all three cities, prices varied widely last week: In Greeley, a daily room started at $149; in Loveland, rates started at $129; Fort Collins costs the least at $119 a night.

Last summer, he said, Greeley rates started at $119 a night. This summer it may go up to $169 a night, he said.

“Some complain, but there’s so many denials — the people who were turned away — someone will rent the room,” Julich said.

Frank Brewster , co-owner of Days Inn, 5630 10th St. in Greeley, raised his rates $5 per room across the board this year in anticipation of a busy summer. People will be able to rent his rooms for $89 a night.

“I try to be the Walmart of hotels,” he said. “With inflation the way it is, I think the days of $100 a night per hotel room is not far off. Everyone expects more, but those things cost money. Free WiFi, free breakfast. Costs will continue to go up.”

The ways hotels are figuring their rates are evolving, as well. In some hotels, prices increase in the last rooms booked.

Some hotel brands have analysts that check the market, room demand and average prices daily, and change prices often.

“It’s just like the airlines,” Van Buskirk said. “Some days, with the demand, you could sell the rooms three times over the market. We don’t gouge, but we just keep it right at average market levels based on the quality of the product.”

The last two years has really provided hotels a boost in Greeley; but their rates have provided the city of Greeley a boost in tax revenue. The city charges a 3 percent tax on the price of every lodging room in Greeley, revenues dedicated to promoting tourism and marketing for the town.

In 2012, lodging tax for the city grew 15 percent, and the city was able to allocate $221,500 for the Visit Greeley program through the Greeley Chamber of Commerce, plus an extra $80,000 for the Greeley marketing campaign. Last year, the Visit Greeley program received $180,000, said Victoria Runkle, city finance director.

More may be coming. Two new hotels are under construction.

Spirit Hospitality in Fort Collins is building its second Greeley hotel, a Candlewood Suites extended stay hotel off of 35th Avenue. Homewood Suites is an 80-room hotel planned in the Centerplace shopping area, but construction has not yet begun.

Candlewood has planned an August opening, but local hotel officials say the market could withstand both hotels opening much sooner than later.

“We definitely know there is a need for rooms,” said Renee von Weiland, vice president of operations at Spirit Hospitality, which also has three other brands in Loveland. “We’ve been taking a lot of Greeley overflow for the last year.”